Santa Clarita Real Estate Update
Do not Buy a Short Sale Until You Read This
June, 2011 - Issue #80
There is so much conflicting information floating around out there about short sales. It's time to separate fact from fiction.

Fiction: You'll get an incredible deal.

Fact: Think again. Unless the home has some serious issues, you'll more than likely pay fair market value or close to it, just as you would with a standard sale. Of course, there are exceptions - but every short sale has a BPO (Broker Price Opinion) completed, which determines fair market value for that particular home. Banks typically want as much for the property as possible and usually won't settle for much less than this appraised value. It's not uncommon to see a BPO come back at a price even higher than fair market value. Buyers are always shocked to receive a counter offer back for tens of thousands of dollars higher than their original offering price and higher than the listing price - after six months or more of waiting for a response! If you are waiting for months or even years hoping for a short sale to get approved at an incredibly low price, you may be missing out on the real deals that exist in the marketplace.

Fiction: You can handle the process.

Fact: You will be emotionally exhausted. A short sale transaction without the right agent will involve many emotional peaks and valleys. The thing to remember is that the bank calls the shots, not anyone else. With months of waiting with no updates and no responses from the bank, the process often becomes too overwhelming for most to bear - and causes the value of the home to diminish. Couple that with the uncertainty of the questions you most likely have: Will you get the home at a fair price? When will you move in? What happens if another six months passes by and you still have no answer?

Fiction: The short sale process is entirely predictable.

Fact: Even the most seasoned agent has not seen it all when it comes to short sales. It really boils down to who the listing agent (agent representing the seller) is, how experienced they are with handling short sales, and who the lenders (banks) are behind the short sale. Although it's never 100 percent predictable, an experienced agent will help ensure a more predictable, streamlined process with a much better result. If you are thinking of submitting an offer on a short sale where the listing agent is inexperienced, get ready for many unexpected surprises!

Fiction: You are ready to take this on.

Fact: If this hasn't completely scared you away from wanting to purchase a short sale, then maybe you are ready! You've come this far so make sure you sit down and form a solid plan of action with an experienced real estate agent who can properly guide you away from the pitfalls of the process. Many short sales get rejected by the banks due to the seller not qualifying because of a lack of financial hardship, or because of incomplete short sale package paperwork from the listing agent. A savvy agent working on your behalf will know to do their preliminary homework by qualifying the short sale to ensure there is a valid hardship with the seller and that the listing agent knows what they're doing.
Joshua Suess is with The Suess Home Selling Team at Re/Max 702-4640
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